Advise your client on hospital observation stays

Say your Medicare Advantage client goes to the local emergency room with a rapid heart beat and shortness of breath. After triage, the attending ER physician advises her to remain in the hospital for a while so he can make sure she’s stable. For two and a half days, your client is attended to by nurses, administered meds and served meals in her hospital bed. After this period of care the physician determines she is fine and ready for discharge.

Then comes the surprise: When the bill comes, she sees her status is “Under Observation.” The outpatient (Medicare Part B) hospital services benefit of her MA plan averages about a 20 percent patient responsibility versus an inpatient (Medicare Part A) status, which would only incur two days of the plan’s set daily copay. She may have not been expecting to pay the amount she has to because of her observation status.

Do your Medicare Advantage clients understand the “Under Observation” hospital status? Did you discuss the term during your appointment? If your client calls Medicare or the carrier’s customer service department stating she was “never advised of such a thing,” you may be risking a complaint being registered against you in the CMS Complaint Tracking Module (CTM).

Letting your client know about observation status in the event of hospitalization can help him or her avoid surprise and disappointment. Visit RBI’s Carriers page to discover Hospital Indemnity products, which can cover the cost of observation stays. Image courtesy of iStock

Another challenge can arise for your MA client regarding any medications she was administered during her observation stay. Under a full admission status, her drugs would usually be covered under her Part A hospital benefit; that’s not so if she is Under Observation. Medicare Part D may cover some of the costs, but it’s likely she will be responsible a majority of these outpatient medication charges.

Even your clients on a Medicare Supplement Plan F can run into problems with the observation status.

While Plan F will likely cover 100 percent of the Part B charges for observation status, other complications can arise if the patient is transferred to a skilled nursing facility. If the patient is under observation status, he or she will not meet the Medicare Fee-For-Service required three-day inpatient scenario that triggers a covered stay in a skilled nursing facility, potentially resulting in thousands of dollars in uncovered services.

Take care of your clients and avoid risking your reputation by advising your clients on hospital observation status. RB Insurance’s Hospital Indemnity carriers now cover observation stays in the same manner as fully admitted days — click on the Indemnity Products tab on our Carriers page to learn more about immediate contracting opportunities. And for a more detailed presentation regarding observation status, see this AARP article on the subject

RB Insurance-affiliated Agents can call (800) 997 3107 or email me to schedule a special training session that will help you avoid the pitfalls of observation status. Like my post? Simply subscribe to receive a few more, once a week in your Inbox.